The demand for independent financial advice continues to grow despite the publicity over pensions misselling and new direct-sellers such as Marks & Spencer and Virgin.
A Special Report on Savings and Investment published this week by Mintel reveals that seven out of 10 adults prefer IFAs, according to a National Opinion Polls' survey for Mintel.
NOP asked consumers if they agreed with the statement: "I appreciate and would use independent financial advisers for most investment products I buy." Results were: 47 per cent agree, 23 per cent agree strongly, 21 per cent disagree, 6 per cent disagree strongly and 3 per cent don't know.
Mintel found that, among those respondents who agreed strongly, there was a slightly greater tendency to be male, over 25 years old and of working status.
But Mintel believes the figures may be misleading. It says: "It is important to note that there is some doubt, often documented, of consumers' ability to identify 'independent' financial advice. Mintel and NOP both acknowledge that the term 'independent', to many consumers, represents unbiased and honest advice, and this could have been delivered by a financial adviser who is not an IFA."
The finding that seven out of 10 want independent advice correlates with a Mintel survey in October 1995 which revealed that 65 per cent took advice of some sort when buying a pension or investment. However, of the advisers, only one-third were IFAs, with the rest being bank managers, accountants, solicitors and "friends", all presumed to be independent.
Face-to-face or telephone advice?
Obtaining face-to-face advice was also considered to be vital by most respondents. NOP asked consumers if they agree with the statement: "It's crucial to have good face-to-face advice when buying a new product like an endowment, Pep, or pension, given the recent bad press relating to financial services."
The answer, perhaps unsurprising given the styling of the question, was that 86 per cent agreed. Owners of unit trusts in particular saw the need for good face-to-face advice when buying financial products.
Conversely, the Mintel report found a growing but still small minority who want to use the telephone for buying financial products.
Consumers were asked if they agree with the statement: "Wherever possible I prefer to take out new savings and investment products by telephone or post."
A total of 73 per cent were against using the telephone, which suggests that the impact that Dir ect Line-style operations have had on the motor insurance market is unlikely to be repeated in the life sector.
However, the report does reveal that support for phone buying is strongest in the 18-24 age group. In a conflicting result, Pep buyers were most likely to buy by phone, although the earlier question had shown that unit trust buyers were most disposed to taking face-to-face advice.
Demand for product information
People would save and invest a lot more if they could understand what financial products are about, according to the survey.
The following question was put to consumers: "I think I would save more if a financial adviser explained it to me"
Mintel found two very distinct groups that did not want more advice. On the one hand, there were those in socio-economic group E, those who depend on state benefits and those aged 65 or more, who simply do not have sufficient income to save more.
On the other hand, there were consumers over the age of 45, living in the South-east and "empty-nesters" who believed they were quite capable of making their own decisions and did not see financial advice as necessary to saving more.
But do consumers really want much more information and advice? Mintel asked consumers if they bother to look after and monitor their investments. It asked if respondents agreed with the statement: I don't actually monitor the return for the savings and investments I have."
Nearly half of the respondents admitted that they do not monitor returns while a total of 47 per cent claim they do monitor performance.
Attitudes towards charges
Given the continuing debate about charges and commissions on financial products, Mintel asked how much charges influence buying behaviour.
Perhaps the only surprising answer is that more than a quarter of people asked appear not to care at all about charges.
It asked consumers to consider the statement: "I always look at charges for savings and investment products and they influence my choice significantly." Forty-seven per cent said that charges were important to them.
New entrants to the financial services market, such as Marks & Spencer and Tesco, may have more success than purely phone direct sellers, according to Mintel's survey figures.
But support for even such well-regarded brand names as Marks & Spencer is not overwhelming, with only 32 per cent saying they would go to such companies to buy financial products.
Respondents were asked to agree or disagree with the statement: "I think increasingly I'll be buying savings and investment products from places like Tesco and M&S." A total of 64 per cent disagreed, with 18 per cent of that total disagreeing strongly.